Britain's first new nuclear plant in a generation on verge of official go-ahead

Britain's first new nuclear plant in a generation is on the verge of getting the go-ahead after the EU struck a deal with the UK Government to approve the £16bn project under state aid rules.

Joaquín Almunia, the EU Competition Commissioner, had been scrutinising the proposed Hinkley Point power plant since December and had initially warned that generous consumer-funded subsidies to developer EDF Energy may constitute illegal state aid.

But in a dramatic u-turn, Mr Almunia has now decided the project should be allowed to go ahead, subject to conditions which have not yet been disclosed.

"Our discussions with the UK authorities led to an agreement," Antoine Colombani, Mr Almunia's spokesman told the Telegraph.

"On this basis, Vice President Almunia will propose to the college of commissioners to take a positive decision in this case. In principle a decision should be taken within this mandate."

In a damning 70-page dossier in January the EC warned that subsidies could be completely unnecessary, hand excessive profits to EDF, and may constitute illegal state aid.

But after months of deliberation the concerns appear to have been addressed.

The decision comes in the context of heightened fears over Europe's energy security in the wake of the Ukraine crisis and Russian threats to cut off gas supplies to Europe.

Headline subsidy terms were agreed to much fanfare last October but key details have been being thrashed out over recent months.

The prolonged negotiations and EU state aid process have already seen EDF miss its own target, announced in October, of taking a final investment decision by July.

A revised timetable has not been issued. However, an EDF spokesman said: "The process to gain approval continues in line with the expected timetable."

“Confirmation that Vice-President Almunia recommends that the College of Commissioners approve the agreement on Hinkley Point C is another positive step forward for this vital project," they said.

If state aid approval is granted, EDF will still need to finalise deals with Chinese state-backed nuclear firms who are expected to take significant stakes in the project, before taking a final investment decision.

Under the subsidy deal, EDF and its partners in the project will be guaranteed a price of £92.50 – twice the current market price of electricity - for each megawatt-hour of power that the reactors generate over a 35-year period.

The UK argues that the project would not take place without the subsidies and fears that if Hinkley does not go ahead it will destroy investor confidence, resulting in “a complete lack of investment in new nuclear plants”.